How can I import GEOTIFF raster data?
Blender can use tiff images, not sure if geotiff works to but it should work too. Otherwise you had to convert the geotiff to a png or jpg first.

Add a plane (same aspect ratio like your image). Go to the modifier tab and add a Subdivision Surface modifier. Set it to Simple. Add 3 or 4 subdivisions and apply the modifier. Add again a Subdivision Surface modifier to control the resolution of your mesh later.

Next add a Displace modifier and add a new Image or Movie texture there. With the rightmost icon you can switch over to the texture tab, load your image and give your texture a name etc.

Back in the modifier tab you can play with the values a bit (Strenght 0.2 for example).

You could add the Decimate modifier to simplify your geometry - just play with the values, Collapse mode should give good results for terrain models.

Here I found a tutorial wich covers also the geotiff conversion (under "Create Heightmap") http://www.navimationresearch.net/2013/norway-in-3d-part-1/ sorry link is dead now.